SpiceJet Chief Executive Officer Neil Mills was all smiles on Monday - with good reason. After five consecutive loss-making quarters, the airline stumped the Street as it posted a profit of Rs 62.44 crore in the quarter ended June. Mills would be particularly pleased that the airline's owners, the Maran family, will also have something to cheer about at a time when it has been under the spotlight for all the wrong reasons. The airline's stock had plunged 11 per cent on Friday amid media reports that the CBI questioned Sun Group Chairman Kalanithi Maran on the Aircel-Maxis deal.
But SpiceJet's first quarter performance, released on Monday, has blown away the worries at least for now. The stock closed 22.4 per cent higher at Rs 30.85 on the Bombay Stock Exchange. Broking houses had anticipated the airline to post a modest loss of up to Rs 48 crore. Although passenger growth has declined, fares are up 30 per cent over last summer and this has, no doubt, helped the airline. But, according to Mills, the peak summer season alone did not lead to the airline's rebound.
"The first quarter is seasonally strong but that's not the only thing that made the difference," Mills said. He told Business Standard improved network planning and changes in capacity deployment helped the airline clock 26 per cent growth in passenger numbers and 51 per cent increase in revenue. "We deployed aircraft on high-demand routes and cut down on some unprofitable ones," he said, refusing to divulge the sectors.
|LEAVING THE LOSSES BEHIND |
SpiceJet's Quarterly loss figures in Rs crore
Routes connecting tier II and III cities with the metros, served by Bombardier Q-400 turbo prop planes, too, had started to break even, he added. The average load factor on these routes is 70 per cent and increasing. The airline flies seven such turbo props and plans to add five-six more such planes this year, airline sources say. At present, it has a market share of 18.6 per cent, the third highest among domestic airlines.
"SpiceJet has seen an increase in loads and yields because of a sharp drop in capacity in the sector. Kingfisher reduced its flights significantly and SpiceJet has been a beneficiary," Rashesh Shah of ICICI Securities said.